| Updated Oct 26, 2020 (Published Oct 14, 2018)

    According to the three-sector theory, all economic activity can be classified into one of three sectors: the primary sector, the secondary sector, and the tertiary sector. As a rule of thumb, we say the more advanced an economy is, the more its focus shifts from the primary, through the secondary to the tertiary sector. In recent years, many economists have argued that the three-sector theory should be extended to include a quaternary sector (and sometimes even a quinary sector). But before we discuss the reasoning behind this, we will look at each of the sectors of the economy in more detail in the video and paragraphs below.

        

    Primary Sector

    The primary sector describes all industries that are engaged in the extraction of natural resources or the production of raw materials. This includes industries such as forestry, mining, agriculture, or fishing. The primary sector is the most basic sector because in its simplest form it does not require a lot of advanced machinery. Therefore, in traditional economies, it is usually the strongest sector in terms of employment. However, in more advanced economies, heavy machinery can be used to significantly increase efficiency and reduce the number of workers needed in primary sector industries. In other words, employment numbers in this sector tend to decrease, as economies develop. As a result, in most modern economies the primary sector only makes up about 10% of total employment.

    Secondary Sector

    The secondary sector includes all industries that are concerned with the manufacturing of usable products or finished goods. It is often divided further into heavy industy and light industry. Examples of heavy industry include steelmaking, mining, construction as well as the production of chemicals, automotive, aircraft, and so on. On the other hand,  light industries include the manufacturing of food, beverages, cosmetics, clothes, home electronics, etc. Both heavy and light industries use the raw material (i.e. output) from the primary sector and process it to the point where the resulting products can be used by other companies for further production or by consumers as finished goods. Many of the industries associated with the secondary sector require heavy machinery, consume large quantities of energy and produce a lot of waste (see also: negative externalities ) during the production or construction process. Nevertheless, the secondary sector is usually the strongest sector in transitional economies. In modern economies, it still employs about 20% of the workforce.

    Tertiary Sector

    The tertiary sector describes all industries that provide services to other businesses or final consumers. It is sometimes also referred to as the service sector or service industries. Examples of tertiary sector industries include retail, health care, financial services, entertainment, and many others. Unlike the two preceding sectors, the tertiary sector focuses on interactions between people rather than the production of goods. However, many of the service industries still rely on goods produced in the primary and secondary sectors to offer their services. As economies develop, more processes can be industrialized and automated. As a result, an increasing number of industries shift their focus towards the tertiary sector. Thus, in modern economies, the tertiary sector employs about 70% of the workforce.

    Bonus: Quaternary sector

    The quaternary sector includes all industries that are concerned with the creation and distribution of knowledge. This sector has emerged a few years ago as a further distinction of the tertiary sector. Many economists argue that knowledge-based industries are distinct enough from classical service industries to warrant a separate sector. Thus, examples of quaternary sector industries include research and development, education, information technology, consulting, etc. Although this idea has become increasingly popular in recent years, the definition and scope of a quaternary sector are not clearly defined just yet, which results in a number of different approaches that each focus on a different set of industries.

    In a Nutshell

    According to classical economic theory, all economic activity can be classified into one of three sectors: the primary sector, the secondary sector, and the tertiary sector. In addition to this, in recent years many economists have argued that the theory should be extended to include a quaternary sector. The primary sector describes all industries that are engaged in the extraction of natural resources or the production of raw materials. The secondary sector includes all industries that are concerned with the manufacturing of usable products or finished goods. The tertiary sector describes all industries that provide services to other businesses or final consumers. And last but not least, the quaternary sector includes all industries that are concerned with the creation and distribution of knowledge.

    What are the three sectors of an economy Answer?
    The 3 main sectors of the economy are primary, secondary and tertiary sectors. Manufacturing comes under the secondary sector, extraction of raw materials industries comes under the primary sector of the economy and the services industry comes in the tertiary sector of the economy. more
    How do you answer a question you don't want to answer?
    Good ways to say anything but "No Comment" to questions you really don't want to answer:
    1. "I'm sorry but I'm not able to speak to that subject"
    2. "Thanks for asking but I'm not able to answer that question"
    3. "I'm sorry but that information is proprietary"
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    Is MCAT short answer?
    Total MCAT – 230 questions, 185 of which are passage-based (80%), and 45 of which are discrete questions (20%). The MCAT asks a lot of questions in a short amount of time, resulting in students struggling to finish some sections of the exam. more
    What is formal sector loans and informal sector loans?
    (i)Formal sector loans are such loans which are taken either from the banks or the co-operatives. While informal sector loans are those which are taken from moneylenders, traders, employers, relative and friends. more
    What sector is HD?
    Description. The Home Depot, Inc. operates as a home improvement retailer. more
    Is Fintech a sector?
    Fintech is one of the fastest-growing tech sectors, with companies innovating in almost every area of finance; from payments and loans to credit scoring and stock trading. more
    How do you answer a question you don't know the answer to in an interview?
    Here are some steps and strategies you can use to answer interview questions you don't know with professionalism and confidence:
    1. Take your time.
    2. Think aloud.
    3. Admit you're unsure.
    4. Use flexible thinking.
    5. Repeat the question.
    6. Ask follow-up questions.
    7. Offer to come back to the question later.
    8. Acknowledge the question's value.
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    How much money will you need for retirement which answer is the most correct answer?
    At age 30, some financial professionals suggest accumulating the equivalent of your current annual income. By age 40, you should have accumulated three times your current income for retirement. By retirement age, it should be 10-12 times your income at that time to be reasonably confident that you'll have enough funds. more
    What is primary sector and secondary sector and tertiary sector?
    The primary sector consists of the agricultural industry and associated services. The secondary sector consists of the manufacturing industry. The tertiary sector consists of the service sector. The primary sector supplies raw materials for goods and services. more
    How do you answer a question you don't know the answer to?
    4 Ways to Handle Interview Questions You Don't Know How to Answer
    • Take Your Time. First things first: Acknowledge that the question was asked and that you're thinking about it.
    • Think Aloud.
    • Redirect.
    • Have a Fail-Safe.
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    What sector is Airbnb?
    Consumer Discretionary Key Data more

    Source: quickonomics.com

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